Napier PHILLIPS v GENERAL ACCIDENT INSURANCE CO (SA) LTD 1983 (4) SA 652 (W)1983 (4) SA p652 Citation 1983 (4) SA 652 (W) Court Witwatersrand Local Division PDF

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Case: Napier
PHILLIPS v GENERAL ACCIDENT INSURANCE CO (SA) LTD 1983 (4) SA 652 (W)
1983 (4) SA p652
Citation
1983 (4) SA 652 (W)
Court
Witwatersrand Local Division...

Description

PHILLIPS v GENERAL ACCIDENT INSURANCE CO (SA) LTD 1983 (4) SA 652 (W) 1983 (4) SA p652 Citation

1983 (4) SA 652 (W)

Court

Witwatersrand Local Division

Judge

De Villiers J

Heard

June 6, 1982; June 9, 1982; June 10, 1982

Judgment

June 15, 1982

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Flynote : Sleutelwoorde Insurance - General domestic policy of insurance - H Insurable interest - Husband insuring diamond ring of wife - True enquiry is whether such amounts to a betting or wagering agreement - Husband insuring ring for value with intention that it be replaced if lost - Moral but no legal obligation to replace ring - Practice established that husband has an insurable interest in wife's jewellery - Husband able to sue and recover loss. Headnote : Kopnota The enquiry into whether a husband has an insurable interest in the property of his wife may yield artificial results, unless one adopts the approach that 1983 (4) SA p653 DE VILLIERS J the question is primarily whethe the contract, having regard to all the surrounding circumstances and especially the intention of the parties, amounts to a betting or wagering agreement (ie, where the one party risks his money against the company on the result of a doubtful event). If there is any doubt, the benefit should be given to the insured, having regard to the fact that A normally the company has, throughout the period of insurance, accepted the insurance premiums and that such a defence is really a technical one. Plaintiff, who had insured his wife's jewellery, had claimed for the loss of a diamond ring worth approximately R10 000 under a general domestic policy of insurance. Defendant refused to pay and raised the issue whether plaintiff had an insurable interest in the goods. It was contended for the defendant that B a spouse has an insurable interest if he or she has the use of the property or is under a legal obligation to replace the article if it is destroyed or lost. Held, that, on the facts, the plaintiff had insured the ring against loss and that, as far as he was concerned, this was not a wager: the ring had been valued at its purchase price and the plaintiff's whole intent in insuring it was to ensure its C replacement in the event of loss, because, although not legally bound to replace it, he nevertheless had felt himself under an obligation to do so. Held, further, that another factor was that, if hard times had befallen plaintiff, his wife would have been obliged to sell the ring in order to provide for household necessities and the husband clearly had an interest in the estate of his wife.

Open Rubric

Held, further, that it seemed that a practice had grown up that D a husband has an insurable interest in his wife's jewellery. Held, further, that, on all the facts, this agreement could not be said to be either a betting or wagering agreement and that plaintiff had an insurable interest in his wife's jewellery. Price and Another v Incorporated General Insurances Ltd 1980 (3) SA 683 (W) followed. E Case Information Action under an insurance policy. The facts appear from the reasons for judgment. D Marais for plaintiff. F Mrs K Blum for defendant. Cur adv vult. Postea (June 10). Judgment DE VILLIERS J: In this matter the plaintiff claims, under a G general domestic policy of insurance, R247 representing the value of a crucifix and R9 700 representing the value of a diamond ring. The amounts are not in dispute. The defendant raises two issues: Firstly, whether the plaintiff had an insurable interest in the goods and, secondly, whether the plaintiff in terms of the H policy of insurance took all reasonable precautions to guard against loss or damage of the goods. Both Phillips, the plaintiff, and his wife appeared to me to be genuine people. Mrs Phillips is 50 years of age and I gauged her husband's age to be about ten or so years older. Both of them made a good impression upon me and I now take up the evidence of Mr Phillips. He married his wife, Mrs Phillips, on 10 June 1967 and purchased 1983 (4) SA p654 DE VILLIERS J the diamond engagement ring for some R9 000. He bought this ring in order that his wife should wear it. In fact she did wear it on all occasions except when she was attending to the cooking of their meals. He testified that although he was under A no legal obligation, he felt morally obliged to replace the ring should his wife lose it. He testified that the gold crucifix his wife bought out of her house-keeping money. He and his wife were married by antenuptial contract. His wife was a person who was not negligent or careless in respect of her property. She had never B lost any item of jewellery and she looked after her jewellery as a reasonable prudent person would. During October 1980 he concluded the insurance agreement which forms the basis of this contract. A valuation of all the items of jewellery was made, and each item valued. In the insurance agreement his wife is referred to as C Phillips. He indicated that this was her name, Charlotte Phillips, and it is also C common cause that when this policy was issued the insurance company was well aware that the two items belonged to Mrs Phillips. Mr Phillips also testified that on a previous occasion the defendant had paid R200 to have a ring belonging to his wife which was damaged repaired in terms of the present insurance policy. D In November 1980 he was the manager of an estate agency business in Johannesburg. He employed his wife as an agent. On 26 November, a certain Luigi came into their office. He asked the people there whether he could read their palms. He himself volunteered and Luigi read his palm. He was very much impressed with this Luigi because of the uncanny knowledge that he E displayed about Phillips' past. He described in some detail that Phillips had been married before, which was so. He also indicated how the marriage had broken up, which was more or less correct and he related other matters, amongst others that Phillips had had a lean time as an estate agent in Durban, which was also so. The upshot of it was that he thought it F would be a good idea if his wife's palm was also read by this Luigi. She was agreeable, after Luigi read her palm he left the office.

On 28 November at about 5 pm he returned home and found Luigi at his house. He had apparently arrived there at an earlier stage and had had a discussion about spiritualism with his wife. They had a general discussion about spiritualism and G associated matters. Both the plaintiff and his wife were interested in spiritualism. Luigi had supper with them and left at about 8 pm. He made a very good impression on them. He was an excellent talker, fitted in well with his surroundings, knew how to behave himself and, as Phillips said, he would have made the best salesman in the world. Luigi indicated to them that he H was married and living in the vicinity of Meyerton. Just before Luigi left he suggested that they give him some or other article to take to his church to be blessed which would then bring happiness to them. He decided to give Luigi a silver tray. It was an article which his wife had inherited. It is clear that he decided on this article with his wife's consent. Luigi also told them that he would like something made out of porcelain so that he could also take that along with him to have it blessed. His wife then went to another room and brought a small 1983 (4) SA p655 DE VILLIERS J porcelain object which was also handed to Luigi. Luigi invited his wife and himself to visit him on 6 December at Meyerton so that they could then meet his wife and family. He did not see Luigi again until midday, between 12 pm and 1 pm A on 2 December, when his wife rang him and asked him whether he could see Luigi, who wanted to speak to him. Luigi came to his office and told him that it was necessary for him to get rid of some or other aura, or some or other "vibe" which was influencing his business and that in order to do so, he had to provide Luigi with a cheque for R2 000 which Luigi would then B have blessed by his church, and would return the next day. That would be 3 December. R2000 was rather a large sum of money for him, having regard especially to the fact that he was overdrawn at the bank in rather a substantial amount. However, he decided to ring up his wife and find out her view. He spoke to her and she was agreeable that he give the money to Luigi. He made arrangements C with the bank, made out a cash cheque for R2 000, exh "B1", which he handed to Luigi. At that stage he was not aware of the fact that his wife had given certain articles, amongst others the diamond ring, to Luigi, and that she had also made a payment to Luigi in the sum of some R800. He testified that after 2 December he did not see Luigi again. On 10 December, he D had occasion to discuss certain matters with his wife. She then told him that she had given the ring to Luigi, and also mentioned the R800 she had also given to Luigi. As a result they went to see their brokers and reported the matter to the police. Both he and his wife made statements to the police. The claim form, exh "A33", was completed together with their E statements. All of these statements and forms were filled in on 11 December. In cross-examination, he said the tray was an heirloom belonging to his wife. He had it replated. His palm had not been read before, it was something that was new to him. He also indicated that he had given the ring to his wife to wear. He F did not notice that between 28 November and 2 December she was not wearing this ring. The reason for this was that she wore many rings and he did not take particular notice whether she wore a particular ring or not. He also conceded that his wife had given certain pearl necklaces to her children. She parted with the pearls freely, it was her property and the reason why she gave the pearls to her children was because of the fact G that she did not like wearing pearls. His wife had her own banking account and did as she pleased with her own property. He was certain that his wife would not have parted with the engagement ring without first discussing it with him. He would not have allowed his wife to give the H ring to Luigi to bless, even though he trusted Luigi, because apart from its intrinsic value he attached a great sentimental value to it.

The reason why he trusted Luigi to the extent to which he did, he says, was attributable to the fact that there was a bond between them, which was strengthened by the fact that they held the same religious beliefs. Mrs Phillips confirmed his evidence in the main. When she married 1983 (4) SA p656 DE VILLIERS J the plaintiff she was a divorcee and was not well off. The crucifix was bought from money which she had saved out of her housekeeping money. Before she had met Luigi, she had never parted with possession of the engagement ring, never mislaid it A and had worn it for a number of years. She also testified that she never mislaid any of her other items of jewellery. She recounted that on 26 November when Luigi read her palm it was quite incredible to her how near he was to the truth in respect of her past life. He told her that she had grown sons B who were married. He recounted the difficult times which they had had in Durban, which was correct. She found him, and I quote her words more or less: "A bona fide sincere young man who had a good knowledge of palmistry and was well versed in the spiritual religion." On 25 November, Luigi had suggested to her that he visit her later in order to discuss spiritualism and to read her palm C again. She agreed and two days later Luigi arrived at about 3.30 pm. This must be on 28 November, although she did not refer to the date. After some discussion she gave Luigi her wedding ring and the crucifix. He was going to take them and have them blessed in his church, which "would bring love and D happiness" to herself and her husband. Later her husband came home. She did not tell him about the wedding ring. She also referred to the incident in respect of the tray which was a family heirloom and the ornament which she removed from the cabinet, both of which were given to Luigi to bless. She further indicated that about two days later, and this would be 2 December, Luigi arrived at her house at 10 in the morning. He E asked her for some money in excess of R800. She did not have so much money and gave him a cheque for R800. He wanted the money for a religious purpose, and to get rid of a bad vibration which was surrounding her on that day. She trusted him because he had returned the wedding ring to her when he arrived that morning. She was not concerned about the bracelet F and the tray, because those items, she understood, would be returned to her later. On that particular day Luigi went into a trance and when he got out of the trance he said to her that she possessed a ring and that there was a bad vibration which was caused by this ring. He wanted it to have it blessed at his church so that the bad vibration could be removed. She knew what he was talking about, because it was clear to her G that he was referring to the gold and diamond engagement ring. She was, however, certain that he could easily have known about this ring because on each occasion that he read her palm she had worn the ring. This, however, did not occur to her on that particular day. She fetched the ring, which was on her dressing H table, and gave it to him. It seemed to her that he put it into one of his socks. Luigi then told her he wanted something woollen to bless. The idea was that he would take this article, bless it, return it to her and that she would then do with it as she pleased. The two of them went to Greatermans where she bought, on the suggestion of Luigi, two rugs for approximately R300 and gave them to him. She had decided to give the rugs to friends of hers after Luigi had blessed them. She then phoned her husband on Luigi's suggestion to find out whether he could see him. 1983 (4) SA p657 DE VILLIERS J She also referred to a cheque of R100, exh "B1", which she had given to Luigi on the day he read her palm. She also gave him R5. She said that her husband did not know that she paid Luigi R105; that he did not know that she had purchased two rugs for R300 and given those

rugs to Luigi; nor that she had given him A a cheque for R800 or that she had given him the engagement ring. She said that she had no qualms about giving the ring to him because he had returned her wedding ring. She was, however, worried about what her husband would do. She thought that, if he knew about it, there would really be trouble. That is why B she did not tell him about this. She described Luigi as being slightly built, tall, dark, big brown eyes, good looking. She herself was naïve but careful and not gullible. In respect of the R100 that she had paid Luigi to read her palm, she thought that that was her own business. She was earning approximately R1 000 per month and could do with her money as she thought fit. She was, as she said, a little C independent, a private and simple person. When asked why she did not tell her husband that she had parted with the ring to Luigi on that particular day, 2 December, she said her husband would be "as made as a snake" because her husband was not as gullible as she was. As far as the ring was concerned, she said that, if her husband D had objected to her giving the ring to Luigi, she would not have tried to persuade him because she knew her husband and knew how far she could go with him. She was sure that he would not have allowed her to part with the ring. Having thought about the events, she felt certain that Luigi must have mesmerized both herself and her husband. A factor E which seems to me to have played an important part when she parted with the ring was the fact that Luigi had returned her gold wedding ring. That concluded the evidence for the plaintiff. Trevor Grey gave evidence for the defendant. He is an insurance broker. He negotiated the present insurance policy on behalf of F the plaintiff during September 1980. He gave evidence that some of the items were taken off the list of items to be insured because the plaintiff said that his money was tied up and the premium was too high. In respect of the R2000 cheque, plaintiff had told him that he had given the cheque to a gypsy to bless and that the cheque would be returned in a day or two, G and he thought that the plaintiff had told him that the money would be doubled. The evidence of the plaintiff in this regard was that he had given the R2 000 to Luigi on the understanding that Luigi would return it the next day. Luigi had also told him that he was going to invest some R6 000 with a building society, of which H his company was the agent. In cross-examination Grey conceded that he had extensive experience in short-term cover. Fifty per cent of his business consisted of this type of insurance. He was aware that the present agreement covered the jewellery belonging to Mrs Phillips and also indicated that he had placed a considerable amount of insurance with the defendant company, where husbands insure their wives' jewellery. Defendant had accepted this type of insurance, had never raised any objections; he was 1983 (4) SA p658 DE VILLIERS J certain that in the present case the company would honour its obligation in terms of the insurance policy and that Mrs Phillips' jewellery was properly covered. He, however, had some misgivings as to whether the plaintiff in A the present case could succeed because of the way in which the jewellery got lost. When he became aware of the approach taken by the company in the present case, he got in touch with them, and asked them what their practice would be in the future on this type of B insurance, namely where a husband insures the jewellery of his wife under the same circumstances as in the present case, to which they answered that they would not raise as a defence the question whether the husband had an insurable interest. He was personally of the view that Phillips did have an insurable interest in the jewellery and, having regard to the C evidence of Grey, I am quite satisfied that Grey in the present case

would not have negotiated this policy of insurance if he had any idea that the company would take the point that the plaintiff had no insurable interest in his wife's jewellery. Grey only became aware of this after he had been summoned as a witness. He found this hard to believe when D Phillips informed him of this; as a result he interviewed the manager of the company and was assured that the company would not take the point of insurable interest in any future case. That was the case for the plaintiff and the defendant. At the outset, I would have liked to have heard what the company's views were in respect of the defence raised by them. E I would also have liked to have heard how they viewed this contract which, on the face of it, made it quite clear that Phillips was insuring his wife's jewellery. That evidence was not placed before me and this Court must now try and evaluate the situation on the evidence which is before it, with this observation, however, that, if anything is left unexplained by F the company which is and will strengthen the plaintiff's case, I will hold that against the company for not putting its case before the Court. I accept the evidence of Phillips and his wife. They can be criticised on rather unimportant aspects. I have no doubt that they were genuinely infatuated by this youngster and that, had G reason prevailed, the two items would not have been lost. I am, however, certain that, as far as Mrs Phillips is concerned, she was more taken up with this spiritualistic cult or religion than her husband and that she fell an easy prey to Luigi's power of persuasion, which caused her to part with the engagement ring. It seems to me that she was genuinely taken in by Luigi, and that she parted with the ring in the bona fide H belief that Luigi would return it. The case involves two issues as I see it. Firstly, whether the plaintiff had an insurable interest in the diamond engagement ring, and secondly whether he complied with para 1 of the general conditions of the policy (exh A at ...